Author Archive

Market Share As a Strategic Goal

Posted by 21 September, 2008 Comments Off on Market Share As a Strategic Goal

Agreat many marketing missions and objectives rest on the assumption that a domi­nant share of your market is a sure-fire recipe for success. Think again about the Starbucks mission-“to dominate every place coffee is sold.” This is in fact a market share objective, and it makes sense only if there is some payoff for holding a dominant share of markets.
Because of the importance of assumptions about market share, a group of pro­fessors with the Strategic Planning Institute (SPI) has assembled a highly detailed database of information on the performance of thousands of individual businesses and business units over four years or more. It tracks the standard financial measures, plus many of the marketing and strategy variables thought to drive financial perfor­mance. In this Profit Impact of Marketing Strategy (PIMS) database, two striking trends appear. First, on average, market share and return on investment (ROI) vary together. A smaller share is typically associated with lower ROI, and vice versa. In fact, the relationship is virtually a straight line, varying from an average ROI of 11 percent for businesses with market shares of 10 percent or less, up to an ROI of 40 percent for businesses with shares of 50 percent or more. Professors Buzzell and Gale write that:

The primary reason for the market share-profitability linkage, apart from the connec­tion with relative quality, is that larger share businesses henefit from scale economies. They simply have lower per-unit costs than their smaller competitors. These cost ad­vantages are typically much smaller than those once claimed hy overenthusiastic pro­ponents of “experience curve pricing strategies,” but they are nevertheless substantial and are directly reflected in higher profit margins.
Second, as their brief aside about quality hinted, the data also show a clear relation­ship between quality relative to competitors, as perceived by customers, and both market share and ROI. The data support the arguments of quality advocates that there does not need to be a trade-off between quality and cost. Higher quality seems to be associated with higher share and lower costs (thus higher margins and ROI) in actual operating data from thousands of companies.
So what happened to Xerox? If firms gain 3.5 points of ROI for every 10 points of market share on average, as the PIMS database indicates, Xerox’s 86 percent share in 1974 should have given it a greater than 25 percent lead in ROI over its closest com­petitors. How could anyone possibly afford to challenge Xerox? This is exactly what its management assumed, and what many leaders in other industries assumed as well. (The U.S. auto industry is a classic example.) But this assumption ignores the impact of quality. Higher profits do not guarantee dominance-it depends on how you spend them! Xerox did not use its cost advantage to maintain its leadership in quality and product superiority, and customers do not share planners’ regard for market position.
Market share represents customers’ past purchases, not their future purchases- something planners tend to overlook-and if a better product comes along, future pur­chases will not remain consistent with past purchases. Market share is a good objective for management, but it is not an impenetrable shield against competitors, as Xerox learned.

Categories : Marketing Tags :

 

Strategy as a Focus Rather Than a Plan

Posted by 21 September, 2008 Comments Off on Strategy as a Focus Rather Than a Plan

One reason strategic planning will never die is that without a strategy of some sort, there can be no clear focus. Many organizations are resuscitating strategic planning, in spite of their inability to see very far into their futures. But the role of strategic planning is fundamentally different. Let’s look at this interesting transition.
In most industries today, events are so fast-paced and unpredictable that no­body can write a plan or create a forecast worth the paper its printed on. H. Igor Ansoff has documented this change in an extensive series of studies. Ansoff’s formal title is Distinguished Professor of Strategic Management at the United States Univer­sity in San Diego-but many people in the marketing field refer to him as “the father of strategic planning” because of his important work in the development of this field. In recent years, his work has provided perhaps the strongest documentation that many of the conventional planning methods are antiquated. Most striking is his mea­surement of what he terms the turbulence level of a business’s external environment. Here is Ansoff’s turbulence scale:

Turbulence Level Name Description
1 Repetitive No change
2 Expanding Slow incremental change
3 Changing Fast incremental change
4 Discontinuous Discontinuous, predictable change
5 Surprising Discontinuous, unpredictable change

Further, he has demonstrated in a range of studies that “a company’s profitability is optimized when a company’s strategy and management capability both match the tur­bulence in the company’s environment.”iS This means, for example, that if your orga­nization used to face a turbulence level of 3 but now faces a level 4.5 environment-a transition typical of most industries over the last two decades-then the old strategies and management approaches will lead to failure today just as surely as they led to suc­cess yesterday. In the high-turbulence environments most businesses now face, Ansoff finds that entrepreneurial and creative strategies work, while reactive and anticipa­tory strategies do not. Yet conventional planning cycles, in which data is gathered, numbers crunched, forecasts generated, and long-term strategies formulated, are gen­erally reactive or at best anticipatory. Not entrepreneurial, and rarely creative.
Which is why, as we observed earlier, formal planning processes were downsized almost out of existence in many companies. And why Tom Peters, that most popular of management gurus, wrote that “madness is afoot” and advised managers that, in order to thrive on the chaos around them, they should abandon their long-range strategic plan in exchange for “a strategic mind-set” so as to be able to foster “internal stability in order to encourage the pursuit of constant change.”i9 In other words, strategic plan­ning as usual is dead.
But strategic planning is experiencing something of a rebirth in the late 1990s. (As Mark Twain once said, “The reports of my death are greatly exaggerated.”) Per­haps the most striking symbol of this rebirth is the rising stature of strategic planning in what was supposed to be its replacement-total quality management. And this is seen nowhere more clearly than in the annual judging criteria for the Malcolm Baldrige National Quality Award. These criteria are modified every year in an effort to provide a better standard for the management processes of U.S. firms, and lately strategic planning has emerged as a key component of the criteria. According to Vicki Spagnol, a member of the award’s board of examiners, “In recent years, Category 2, Strategic Planning, has undergone significant evolution, which has expanded its scope and made it more central to the overall criteria.” She summarizes the change as follows, “The scope of planning was broadened from planning for quality and op­erational improvements to developing an overall business strategy. Greater emphasis was also placed on translating strategy into action-oriented ‘key business drivers,’ which could be used to deploy strategy throughout the organization.” Why bring strategic planning out of moth balls, especially when many people argue it is what led to the need for new approaches like total quality management and reengineering in the first place? Because, in Spagnol’s words, “The faster the rate of change, the more important it is to understand the dynamics of the marketplace and to have a strategy that will enable an organization to outperform its competition over the long haul.” Fast change makes a good strategy more essential than ever. But-and here is the paradox-fast change (and the high turbulence with which it is typically associ­ated) makes coming up with a good long-term strategy almost impossible. Whatever knowledge base the strategy rests on will be antiquated by new events before the im­plementation is half-way complete. How do you resolve this paradox-this great need for good strategy in conditions which make it terribly hard to design good strategy?
The most successful answer-and the key to strategic planning’s rebirth- seems to be to use strategy as a source of focus and direction, not as a blueprint. Lis­ten to Steve Roemereman, vice president and strategy manager of Texas Instruments’ Defense Systems & Electronics business (which won the Baldridge Award in 1992):

Most of those companies that had a great decade did it not by planning out forty great quarters. They had a strategic plan, and then they executed forty great quarters more or less along the lines of the plan. Their people knew where the company was going, and the shared knowledge made it easier to get good quarterly performance.
In other words, the strategic plan gave everyone a common focus, a vision of where the company wanted to go. And then everyone did whatever seemed necessary to get there. The role of this plan, then, is to provide focus rather than direction, to give a common purpose rather than to give specific instructions. The entrepreneur­ial, creative elements aren’t in the plan. They have to be provided by the people who implement it. Nobody can forecast those. But without some agreement on where the entrepreneurship and creativity is supposed to take you, everyone would pull in dif­ferent directions.
In order for strategic plans to perform this focusing role effectively, everyone must have what is coming to he called a line of sight, which is a clear view of the con­nections between their own work and the big picture of the organization’s strategy. Without it, they cannot improvise without losing the tune. The American Society for Training and Development reported that the goal alignment provided by such lines of sight “has a significant impact on employee performance” because it “enables em­ployees to see how their work helps the company succeed.”22 Thus strategy still has a vital role-perhaps an even more vital role-because in turbulent markets it may be the only constant, the only clear beacon to aim for, amid the chaos.

Categories : Marketing Tags : ,

 

Do You Know Your Way?

Posted by 21 September, 2008 Comments Off on Do You Know Your Way?

The focus principle (or should we call it the “focus-focus-focus principle”?) is close cousin to the “don’t-get-lost” principle of marketing strategy. Sure, you should always try to give customers what they want and need-but within your abilities. If you allow the search for hot new marketing ideas to take you too far from your core com­petencies, you can lose your focus and wander in the strategic desert. Getting lost is a sure-fire way to lose your focus.
Despite the wisdom of customer-oriented market definitions, it can be very dangerous to move into unfamiliar territory, as Anheuser-Busch discovered along with Levi Strauss in the 1980s. Anheuser-Busch’s management felt that its single-minded emphasis on the domestic beer business did not give it any way to use the ex­cess cash it generated. As a result, the company redefined itself as a global food and beverage business and introduced the premium-priced Eagle brand of pretzels, corn curls, tortilla chips, and nuts. It also increased emphasis on its Dewey Stevens, a diet wine cooler; low-alcohol LA; and soda and bottled waters. The company’s focus was on making better use of the firm’s distinctive competency in beer distribution and developing new products for its existing markets.
By 1988, the company was retrenching heavily, having put up for sale its three bottled water products and its California winery. “The beer guys weren’t wine or water guys,” said a former company executive. The company “didn’t know how to sell the stuff properly.” And in the wine cooler market, where all products are already perceived as “light,” Anheuser-Busch could not establish a foothold. Perhaps the greatest trouble spot, however, rested with the company’s Eagle brand of snacks. On top of tremendous capital expense for the start-up, Eagle managed to lose several million dollars each year following its inception.
A more recent example is provided by Starbucks Coffee Company, which made fast work of the coffee market by creating the largest chain of cafes in the United States during the 1990s. As this book heads for the printer, Starbucks is going in a new direction-the supermarket shelves. Procter & Gamble (P&G) Company’s Folgers brand is the leader in supermarket sales of coffee beans, followed by Kraft Foods’ Maxwell House. But not for long in the view of Starbucks’ president Howard Schultz. He too sees the marketing implications of his mission, which says Starbucks has to be the dominant force in the coffee business.
Is Starbucks making a classic marketing blunder? Will it lose its way in the bat­tle for supermarket shelves-as many contenders have over the years? Is this new bat­tleground too different from the old one, a dangerous loss of focus? Or is Schultz right that the company can beat out P&G and Kraft at their own game because of the growing value of the Starbucks’ brand name? Only time will tell-but we are willing to guess. We bet you won’t find Starbucks dominating shelf space or register receipts at the average grocery store in the year 2000. And we suspect the expansion of its chain of cafes may slow as management diverts attention to the grocery store battle instead. But we have to hedge this bet with the comment that some of the greatest strategic breakthroughs sounded far more hair-brained than this strategy does at in­ception-you can never be sure. Starbucks just might pull off a coup in the coffee aisle. But we will be surprised if they do!
The many cases in which marketers got burned by overextending lead us to sound a cautionary note-it can be hubris to pursue unfamiliar products and markets, even if the customer demand is clearly there. There appear to be practical constraints on how far a field a company should go in pursuit of the marketing concept. However, to be fair, a single-minded focus on a firm’s familiar products and technology also can land it in big trouble. Remember Levitt’s marketing myopia described in lesson 1:When cars and trucks came along, railroad companies ignored them-and entered a long, slow decline. Why? Because they saw themselves as specializing in laying track rather than in transporting people and freight.
Maybe it would be as bad a mistake for Starbucks to see itself in the coffee store business instead of the coffee business. Are they really in the restaurant business? (Hmm. Got to think about that one.) There is often a fine line between the sort of marketing myopia that doomed the railroads and the overconfidence of an Anheuser­Busch (or Starbucks). The success of Levi’s Dockers illustrates the importance of ex­pansion that makes sense to the customers. Another product line for established customers is a safer bet than something totally new to the company, and smart strate­gists pursue the safe bets whenever there are any to be found.

Categories : Marketing Tags : ,

 

Three Secrets of Strategic Success: Focus. Focus, and Focus

Posted by 21 September, 2008 Comments Off on Three Secrets of Strategic Success: Focus. Focus, and Focus

The Levi Strauss story teaches another important strategic lesson-the importance of focus. And focus. And focus! It is hard enough in a competitive market to do even one thing really well, well enough that you attract and retain customers better than com­petitors. When companies have a clear focus, they are trying to do one thing well, which at least gives them a fighting chance. As soon as their mission begins to sprout “ands,” they are at risk of doing nothing well. That is certainly a point Andrew Grove, president and CEO of Intel Corporation, takes to heart. He argues that it takes every erg of energy in your organization to do a good job pursuing one strategic aim, espe­cially in the face of aggressive and competent competition. Without exquisite focus,

the resources and energy of the organization will be spread a mile wide-and an inch deep. If you’re wrong, you will fail. But most companies don’t fail because they are wrong; most fail because they don’t commit themselves. They fritter away their mo­mentum and their valuable resources while attempting to make a decision. The great danger is standing still.

Categories : Marketing Tags : ,

 

Drivers of Strategy: Vision. Mission. And Objectives

Posted by 5 April, 2008 (1) Comment

MARKETING AND STRATEGY
Using Tested Concepts and New Ideas for Marketing Strategy.

 

DRIVERS OF STRATEGY: VISION. MISSION. AND OBJECTIVES
Who are we and why are we here? Such questions may baffle philosophers for cen­turies, but businesses and their employees don’t have the luxury of debating them forever. In business, we must resolve the fundamental questions, establish their oper­ating values and principles and seize upon a mission. Otherwise we cannot get around to the urgent necessity to do something. As Will Rogers once said, “Even if you’re on the right track, you’ll get run over if you just sit there.”
The well-springs of marketing strategy are at the top of the organization, where the senior executives are expected to earn their bloated paychecks by establishing a bold, profitable vision and mission.
When Howard Schultz of Starbucks says, “We will dominate every place coffee is sold,” he is articulating a mission that his people can readily translate into market­ing strategies.’0 With this mission in mind, it is obvious, for example, that the Star-bucks brand of coffee must be marketed in grocery stores, not just through the Starbucks chain of stores.
From the corporate mission, the organization (in conventional planning) is sup­posed to develop a set of objectives that will direct it over a 3- to 5-year period. These objectives are generally stated in terms of sales growth, market share improve­ment, profits, innovation, acquisitions, and risk reduction. (In the new strategic plan­ning, however, the validity of long-term forecasts and plans is no longer taken for granted; the environment changes too rapidly. More on that in a moment.)
From general corporate objectives flow more specific marketing goals. These goals may focus on overall sales increases, but usually they are somewhat more de­tailed, calling for sales increases by product class, geographic region, or type of cus­tomer. It is generally assumed that market share improvement translates into higher sales volume, and higher volume means lower production costs and higher profits. Thus, marketing goals are often expressed in terms of improvement in market share, or the percentage of the total market served by the company. Market share is the chief measure of how well an organization is doing relative to its competitors.
Strategic market planning takes its direction from the overall organizational goals. Although we often think of an organization as simply setting targets for sales, profits, return on investment, and the like, organizations usually have broader, less measurable objectives. An organization is, or ought to be, guided by the invisible hand of its purpose or mission. In this sense, the mission of computer companies is to pro­vide information, and that of telephone companies is to facilitate communication. Rather than considering itself a copier company, Xerox sees itself as an “office of the future” company. Some organizations have even more abstract missions: Consulting firms can be seen as providing education, museums as preserving a cultural heritage, and so on. These missions guide the organization’s marketing efforts and shape its strategies and plans.
The corporate mission depends on how the organization defines its business. That definition is based on the answers to two questions: “What business are we in?” and “What business should we be in?”
Sometimes too broad a business definition can create problems for an organiza­tion. For example, Levi Strauss, a leader in the apparel industry, added many new lines throughout the 1970s, including sportswear, youth wear, and ski clothes. In a 1979 talk to securities analysts, the company’s president stated that Levi Strauss should be looked upon “as a consumer-products company that just happens to be in the garment business.” As one worried analyst told Fortune, “If they ever really start to believe that, it’s trouble.” Such a broad business definition would allow the com­pany to add a whole range of products with which it has no marketing experience- cereals, automobiles, detergents, watches, and so on.
Although it did not take such a wildly divergent approach, Levi Strauss did move into higher priced, more fashion-oriented lines. And the skeptical analyst ap­parently was correct. The period from 1980 to 1982 produced a 10 percent drop in sales for Levi Strauss and a 76 percent plunge in net income. In 1982, the company eliminated many of its upscale product lines and returned to its emphasis on mid-priced, middle-class-oriented apparel, especially its well-known jeans. Its president then told Business Week, “We’ve realized that just putting Levi’s name on something isn’t enough to gain instant marketing acceptance.” Now it sees itself as an “adapt­able” company, able to take advantage of opportunities to which its distinctive com­petencies are applicable. For example, with the apparent emergence of a global generation of teens with similar tastes and values, Levi Strauss has been quick to try its hand at global marketing. It sells a 1960s style across the planet, and it is even gaining popularity in the United States.
The company’s product mix is now somewhere between the narrow jeans-only strategy of its early years and the unfocused consumer-products focus of the early 1980s. New products generally have some tie-in with the jeans identity and market, meaning that it makes sense to consumers for Levi Strauss to sell them. The current star of its product line illustrates this point. Dockers is a line of casual slacks for men made from a cotton twill that is softer and more comfortable than denim. It is tar­geted at aging baby boomers, the same customers who made jeans a runaway success in the 1960s and 1970s. According to Alan Millstein, editor of Fashion Network Re­port, “Levi Strauss really understood the forty-something generation,” who “have been living off beer, pretzels, and microwave popcorn. Their waistlines have ex­panded… and they can’t fit into their jeans.”‘4 But they can fit into Dockers, and the success of this product fueled a surge in Levi Strauss’ income in 1991 and laid the foundations for Levi Strauss’ expansion into the growing market for casual office clothes during the mid-to-late 1990s.

Categories : Marketing Tags : , ,

 

The Strategic Market Planning Process

Posted by 5 April, 2008 Comments Off on The Strategic Market Planning Process

MARKETING AND STRATEGY
Using Tested Concepts and New Ideas for Marketing Strategy.

THE STRATEGIC MARKET PLANNING PROCESS

The strategic planning process traditionally starts with the setting of objectives for the organization as a whole and continues with the development of marketing goals that reflect those objectives. Next, the strategic planner conducts the situation analy­sis, beginning with an in-depth look at the environmental trends that will affect the organization. The planner can be said to be looking outward through a “strategic win­dow,” viewing the present and predicting the future. Then the planner looks inward through the strategic window to analyze the organization’s strengths and weaknesses. A key purpose of this step is to assess the firm’s distinctive competencies, that is, what it can do better than other firms.These two steps, external and internal analysis, are the cornerstones of tradi­tional strategic market planning. They provide the information base from which the rest of the process follows-at least in a top-down approach to planning, which is what the traditional model entails. The situation analysis may also lead to adjustments to inappropriate corporate or marketing objectives. (This remains true today, al­though the nature of the analysis is changing rapidly.)
After completing these two fact-finding steps, the planner generates alternative plans or strategic options. The planner then chooses the option or set of options that best matches each market opportunity with the strengths of the organization. This is a crucial step because the organization’s distinctive competencies may be only occa­sionally and briefly aligned with those required by a dynamic external environment. Strategic planners must be ready to seize upon such opportunities as they arise. In the rest of this lesson, we will present information on how each of these steps in market planning is traditionally performed-along with ideas about how they are changing and how they need to continue to change in order to keep strategies relevant and vital.

Categories : Marketing Tags : ,

 

Strategies and tactics: the Cornerstones of Conventional Planning

Posted by 17 March, 2008 Comments Off on Strategies and tactics: the Cornerstones of Conventional Planning

Marketing and Strategy
Using Tested Concepts and New Ideas for Marketing Strategy.

 

STRATEGIES AND TACTICS: THE CORNERSTONES OF CONVENTIONAL PLANNING

Strategy is conventionally thought of as the overall game plan or blueprint that guides the organization toward achieving its objectives. Tactics are the detailed, individual activities that the organization undertakes to carry out the strategy. They specify how the elements of the marketing mix-the four Ps discussed in Lesson 1-will be allocated, and they allocate manufacturing, capital, people, and other resources as needed.
With the help of a strategic plan, members of the organization can develop tac­tical plans that are much more detailed than the strategic plan. A written plan per­mits others to evaluate the reasoning and assumptions that underlie the firm’s objectives. The plan helps to coordinate the activities that must be implemented to carry out the plan. It also serves as a control device: Actual results can be compared with the intended results outlined in the plan, and adjustments can be made if neces­sary. This formal view of the plan has not been entirely abandoned, but managers today are more likely to see vision or mission as driving the company, above strategy in the strategy-tactics hierarchy. They also may allow more leeway for employees than formal tactics and controls once did.
Marketing plays an important role in the firm’s strategic plan by providing spe­cific information about the firm’s current market position and its opportuniti6s for future market positions. Marketing also participates in the organization’s planning process by developing specific strategies and tactics for products, customers, distri­bution channels, and the like. These will be incorporated in varying degrees into the organization’s formal strategic plan, and will also form a stand-alone marketing plan to be followed by people in sales, product development, and other functions.
The process of strategic planning rests on assumptions held by the planner. As­sumptions concerning expected responses to marketing actions will shape the mar­keting strategy and tactics. Assessment of the outcomes allows the planner to validate those assumptions or create new ones. The importance of sound assumptions cannot be overemphasized.
Feedback provides the basis for evaluating and revising assumptions. Learning by feedback comes through experiencing the plan-execution-feedback process illus­trated in Exhibit 2.1.

See Exhibit 2.1

In the top-down approach, which was once the norm for most companies, the task of charting an overall strategy for an organization rests mainly with top manage­ment. That strategy then guides the decision making of managers at each organiza­tional level. Many firms now employ bottom-up planning, in which plans developed at the lower levels of the organization are blended into a master strategic plan. Such a plan may turn out to be more marketing oriented than a plan formulated by the top-down method, mostly because it is created by those in daily touch with the cus­tomers, the competitors, and the realities of operation. As a Fortune article pointed out, the strategic watchwords for the first half of the 1990s were “focus and flexibility.” Focus means determining what you do best and building on it. It originates at the top. Flexibility means drafting several possible scenarios for the future so the organization can be ready to explore opportunities as they arise without having to shoot from the hip, and it also means giving the bottom enough freedom to be truly flexible.

Categories : Marketing Tags : , ,

 

The 1980s: a Turning Point for Marketing And Strategy

Posted by 17 March, 2008 Comments Off on The 1980s: a Turning Point for Marketing And Strategy

MARKETING AND STRATEGY
Using Tested Concepts and New Ideas for Marketing Strategy.

 

THE 1980S: A TURNING POINT FOR MARKETING AND STRATEGY

If any single factor can be blamed for the death of strategic planning, it must be the failure of the U.S. economy to compete globally during the 1980s. This economic bot­tleneck in the United States forced a reexamination of every aspect of business man­agement. And even though the economy rebounded in the 1990s, that examination revealed too many warts for anyone to want to return to business as usual. The failure of conventional strategies and management methods became painfully obvious in the 1980s as the trade imbalance in categories such as autos, machine tools, consumer electronics, semiconductors, and textiles took a nasty turn for the worse on the econ­omist’s charts. A report from MIT’s Commission on Industrial Productivity summed up management’s initial response to the problem:

The decline of the U.S. economy puzzles most Americans. The qualities and talents that gave rise to the dynamism of the postwar years must surely be present still in the national character, and yet American industry seems to have lost much of its vigor. In looking for ways to reverse the decline, it is only natural to turn to the methods that succeeded in the golden years of growth and innovation. Many business managers have adopted just this strategy. The results, unfortunately, are rather like those of a man who keeps striking the same match because it worked fine the first time.
This failure to measure up to global competition left the people at Xerox look­ing through their pockets for another book of matches. Xerox’s story is an excellent il­lustration of what is happening to planning in U.S. businesses at this critical turning point in history. In 1974, Xerox had a stunning 86 percent world market share for photocopiers. What could possibly go wrong? As discussed shortly, conventional plan­ning models assume that strength and profits flow from strong market shares. But as new competitors, such as Ricoh and Canon, entered the market, Xerox fell back, all the way to a 17 percent market share in 1984.8 If strategic planning really was king, Xerox’s managers would have been beheaded! The company began to climb back out of its hole in the latter half of the 1980s, regaining lost share and improving quality. Along the way, Xerox invented new ways of planning and implementing strategy, and adopted many of the best techniques used by its Japanese competitors. We’ll start with a quick review of the planning models that led companies such as Xerox into so much trouble.
It is easy to dismiss the old approach to planning as worthless, but this is not fair. Managers today cannot ignore the old wisdom, but they also cannot rely on it to provide competitive advantage. One must know yesterday’s techniques to play the game, and must pioneer tomorrow’s techniques to win it. One must realize that the changing environment requires new tools, and the old tools by nature lose their edge when everyone learns to use them. As this lesson’s opening quote suggests, there is a sort of arms race in strategy, with the advantage going to the innovators. But, al­though “smart missiles” may now carry the day, it would still be folly to enter the bat­tlefield without a rifle. Business strategy is similar: Today’s planners must master both the old and the new. (And then, most likely, invent something of their own any­way. But more on that later!)

Categories : Marketing Tags : , , ,

 

Marketing And Strategy

Posted by 17 March, 2008 Comments Off on Marketing And Strategy

MARKETING AND STRATEGY
Using Tested Concepts and New Ideas for Marketing Strategy.

 

If the purpose of strategy is to gain competitive advan­tage, then by implication theories of strategy should be continually in flux. Any new insight that obtains wide currency. . . loses value in providing additional com­petitive advantage . . . This self-destructive aspect of strategic insight. . . has received limited attention, as has the attendant need to be continually innovative and creative.

Paul Schoemaker,
Graduate School of Business.
University of Chicago

If there’s a hell for planners, over the portal will be carved the term “cash cow.”

Stephen Hardis,
Vice President of Planning,
Eaton Corporation


If theories of strategic planning should be “continually in flux,” as Paul Schoemaker observes in the first of our opening quotes, then all is well with the world, Because there cannot be any field more turbulent or unstable in the entire management panoply than strategic planning and its alter ego, marketing planning.
“Strategic planning is dead; long live strategic planning!” seems like an appro­priate way to begin this lesson, for it is necessary both to mark the passing of the old strategic planning and to note the exciting emergence of entirely new approaches, much as the succession of kings was once heralded. But the problem is, nobody seems quite sure who the rightful heir to the throne will be.
Since its birth in the 1950s and 1960s, strategic planning reigned by giving managers a new and exciting set of more marketing-oriented tools for analysis, plan­ning, and control. Innovators such as the Boston Consulting Group and General Elec­tric discovered the wisdom of identifying opportunities based on market analysis rather than solely on financial analysis, and their philosophy and techniques spread rapidly throughout the 1970s and into the 1980s. But strategic planning’s growth stalled in the 1980s, with many companies abandoning their large planning staffs and forsaking more complex analytical methods and planning processes, and by the begin­ning of the 1990s, it was moribund. When Gary Reiner of the Boston Consulting Group wrote in 1989 that “planning is passé,” it was clear that a succession was immi­nent. The problem was that the old king had left no legitimate offspring, so managers must find their own. They face the daunting task of planning in the face of great un­certainty and rapid change, and without any simple prescriptions guaranteed to do the trick. As Michael Porter of the Harvard Business School sees it, “The state of practice in this area is very primitive.”
What has replaced the orderly strategic planning cycles of the 1980s? The ex­perts offer many answers, but no single approach has been sufficiently successful to rein in peace for very long. David Aaker of the Haas School of Business at UC. Berkeley believes that strategic market management displaced strategic planning in the mid-1980s because “the planning cycle is inadequate to deal with the rapid rate of change that can occur in a firm’s external environment.” And he characterizes this new market-driven approach to strategy as being highly responsive to the “strategic surprises and fast-developing threats” of the modern marketplace.
Strategic market management is like a new, faster, and more flexible strategic planning in that it encourages “real-time” response to external changes, rather than tying an organization’s rate of change to its annual planning cycle. In theory, at least, this rapid-response approach to strategy should keep businesses on or above the pace of change in their markets, allowing them to anticipate, even lead change.
But the most popular form of business strategy in the 1990s is the massive “re­structuring” that is generally accompanied by a major downsizing and a closing of fa­cilities and/or sell-off of subsidiaries or brands. The daily financial news should provide you with fresh examples whenever you read this lesson. Here’s just one typ­ical example from The Wall Street Journal on the day we wrote this paragraph:Tool and hardware maker Stanley Works swung to a second-quarter loss because of a charge for a restructuring program that includes closing 53 of its 123 plants and elimi­nating about 4,500 jobs, or 24 percent of the company’s workforce.The popularity of this sort of massive restructuring, with its deep cuts of prod­uct lines, divisions, facilities, and people, is the strongest possible evidence that strategic planning as practiced today is unable to anticipate and prepare for change. If companies grew and changed along with their markets, they would never get so profoundly out of alignment as to necessitate closing a third of their plants or firing a fourth of their people.
The failure of formal planning processes to anticipate important changes and align the organization with them in advance led Henry Mintzberg, a strategy expert from McGill University, to title his major review of the field The Rise and Fall of Strategic Planning. The king is dead. Long live the new king.., whoever he may be!

Why split hairs? Because many people and many managers think U.S. organiza­tions have already adopted the marketing concept, whereas in fact its essence is still missing at most companies.

Categories : Marketing Tags : , ,

 

PEL & Dawlance – Introduction

Posted by 16 March, 2008 Comments Off on PEL & Dawlance – Introduction

PEL (Pak Electron Limited) and Dawlance both are Pakistani companies engaged in same business of Home Appliances. However, PEL is also making Power Products like Energy Meters, Transformers, Switch Gears etc. PEL is considered pioneer of eletrical appliances in Pakistan as it started its activities in 1956. PEL was taken over by Saigol Group of Companies. PEL is awarded SuperBrands Pakistan 2007-08. The Brand Ambessdor of PEL is Hadiqa Kayani which is famous singer of Pakistan.

Dawlance refers to reliablity and durability. Therefore, Dawlance products is generally considered as reliable and durable. One more thing I want to add here that, they are directly hitting the minds of viewers/readers by saying “kyun k Dawlance reliable hai”. Dawlance was established in 1980. Initially they started their business with referigerator manufacturing but now they are making refrigerators, deep freezers, washing machines, small appliances, air conditioners, televisions etc. There is no brand ambassador of Dawlance. Dawlance has become the largest company engaged in appliances business. Their customers are Middle-Upper, Upper-Lower, Upper-Middle-Class, Upper-Upper Class.

Categories : Marketing Tags : , , ,